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​​EUR/USD subdued, GBP/JPY and USD/JPY rally on tweaked BoJ forward guidance

​​Outlook on EUR/USD, GBP/JPY and USD/JPY amid BoJ meeting and avalanche of European preliminary GDP and CPI releases.

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​​​EUR/USD consolidates into month-end

EUR/USD spent this week in a volatile sideways trading range above its March-to-April uptrend line at $1.0998 which may be revisited on Friday amid a plethora of European nation preliminary gross domestic product (GDP) and consumer price index (CPI) data and following Thursday’s much weaker than expected US quarter one (Q1) GDP reading of 1.1% versus and expected 2%.

​The cross remains capped by the $1.1075 to $1.1095 zone and is seen heading back down towards the psychological $1.10 mark and the March-to-April uptrend line at $1.0998.

​Provided the next lower Tuesday low at $1.0965 holds on a daily chart closing basis, the January 2022 low and early-March 2022 high at $1.1121 to $1.1122 remain possible upside targets. Support below $1.0965 can be found at the $1.0929 late March high and also at last week’s low at $1.091.

EUR/USD chart Source: IT-Finance.com
EUR/USD chart Source: IT-Finance.com

​GBP/JPY surges higher as review of BoJ monetary policy is announced

GBP/JPY has come under pressure following an announcement of a review of policy by the new Bank of Japan (BoJ) governor, though Mr Ueda held off on any change to the ultra-loose monetary policy.

The pair has thus risen to levels last traded in November of last year and is gunning for the psychological ¥170.00 region, above which sits the October 2022 peak at ¥172.13.

​Good support can be spotted between last week’s and this Tuesday’s highs at ¥167.97 to ¥167.96. While the next lower low seen earlier this week at ¥165.43 underpins, the medium-term uptrend remains valid.

GBP/JPY chart Source: IT-Finance.com
GBP/JPY chart Source: IT-Finance.com

​USD/JPY rallies as BoJ tweaks forward guidance

​Newly appointed governor of the BoJ Kazuo Ueda kept short-term interest rates at -0.1% and 10-year bond yields around 0% but modified the central banks’ forward guidance by removing references to the COVID-19 pandemic and vowing to keep interest rates at “current or lower” levels, sparking a sharp sell-off in the yen.

USD/JPY thus surged higher by over 1% and is fast approaching its uptrend channel resistance line at ¥136.14, above which beckons the 200-day simple moving average (SMA) at ¥136.95.

​Potential slips should find support between the mid-March and last week’s highs at ¥135.13 to ¥135.11.

USD/JPY chart Source: IT-Finance.com
USD/JPY chart Source: IT-Finance.com

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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